Why It’s a Bad Move To Use the Same Credit Cards Indefinitely

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Although credit cards offer a high level of convenience, they’re not for everyone. If you have trouble paying off your balance every month, you’ll end up paying high interest charges and potentially damage your credit score. However, for those who can use credit cards responsibly, they can be a great financial tool. For starters, proper credit card usage can raise your credit score, which will potentially lower the interest rate on any future borrowings, from auto loans to home mortgages. Credit cards also typically provide a wide range of perks. Here are some reasons why you might want to responsibly open new credit cards from time to time rather than simply relying on using one.

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Read: Picking the Top Cards for Travel, Rewards & More for GOBankingRates’ Best Credit Cards List

Drawbacks of Using the Same Credit Cards Indefinitely

The main drawback of using the same credit card indefinitely is that you may be short-changing yourself when it comes to benefits. New cards typically carry lucrative sign-up bonuses, and card issuers are constantly innovating when it comes to new features and benefits. Even if your card was considered cutting edge or top-of-the-line at the time you got it, it’s likely been eclipsed by the value you can get out of newer cards. 

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If you’re looking to keep your credit score high, it might actually be to your advantage to have a few different credit cards instead of just one. The reason is credit utilization, which is a big factor when it comes to your credit score. With more than one credit card, you’ll have a higher total credit line. If you carry a balance on your credit cards, a higher total credit line will keep your credit utilization low, helping to protect your credit score.

See: 4 Credit Cards That Are Great for Day-to-Day Errands
Read: Jaw-Dropping Stats About the State of Credit Card Debt in America

What Benefits Can You Expect From a New Card?

Signing up for a new card can open up a world of new benefits to you. For starters, most cards these days offer at least some type of sign-up bonus, from a $100 statement credit to 100,000 or more points. After that, most cards will provide you with a wide array of features and benefits. Typically, the most expensive cards offer the most benefits, from free baggage on airlines to lounge access, free subscriptions to food delivery services, travel credits and more. But even cards with no annual fee can offer a number of features, from bonus points on purchases like groceries, gas stations and travel to cellphone insurance and anniversary points bonuses. 

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Find Out: New Survey Reveals What Americans Hate Most About Credit Cards
Important: Can You Pay Off a Credit Card With Another Credit Card?

Beware of Signing Up for Too Many Cards

Although there are many benefits to signing up for new credit cards, there are caveats as well. Every time you apply for a new credit card, your credit score will get dinged by a few points. This is only temporary, and the drop doesn’t last that long, but too many inquiries in a short period of time can result in quite a drag on your score. Potential lenders might also view your multiple requests for credit as a sign of financial instability, making them less likely to extend you additional credit. 

Another drawback of having too many credit cards is the amount you’ll have to pay in annual fees. While not all cards charge a fee, if you have 10 or 20, you’re likely paying a few hundred dollars per year just in annual fees, and perhaps as much as $1,000 or more. You might also be tempted to spend more if you have an ever-increasing credit limit, which could result in significant interest charges if you’re unable to pay your balances in full.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.
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